Sri City plans to go public

Sri City, developer of a special economic zone (SEZ), is planning to go public in the next two-three years to raise Rs 2,000 crore. The company is also looking at a private equity partner, said its managing director Ravindra Sannareddy.

The SEZ, spread across 6,000 acres at Tada in Nellore district of Andhra Pradesh, has so far attracted 22 industries that would generate 10,000 jobs in the next 18 months.

Reddy said another 100 units were likely to come up by 2012 and bring in around Rs 8,000 crore. The IPO proceeds would go into creating infrastructure and support the development plans in the SEZ.

The Chennai-based company is looking at sectors including engineering, auto/auto components, renewable energy, textile, agriculture, electronics, IT/BPO and leather allied products among others.

At present, it has 15-20 proposals, including from a renewable energy company and a train wheel manufacturer. Reddy declined to reveal the names but said both the companies were European majors and would bring investments to the tune of Rs 1,000 crore. “Both the companies have finished their due diligence and are awaiting financial closure for the projects,” said Reddy.

To create infrastructure for these units, Sri City has invested Rs 450 crore and will spend another Rs 600 crore next year. A gas-based power plant too is planned. “It all depends on Reliance Industries' upcoming project in Andhra Pradesh,” he said, adding in the next five years the SEZ would require 500 Mw of power. “We don’t want to go for a coal-based plant due to pollution.”

For creating social infrastructure, which would attract investments worth Rs 2,500 crore, Sri City has tied-up with Euro schools to set up three residential schools. Each school would cost around Rs 80 crore.

Similarly, it has tied up with Front Line Hospitals to set up a hospital and is looking for a partner to develop a township, which would attract investments worth Rs 1,500 crore. The company is planning to develop 50,000 houses to start with and go up to 100,000 units along with a promoter.

The SEZ will also have a 3-star hotel and a shopping complex. “We will provide land, while the money will be brought in by the partner,” said Reddy.

According to Reddy, the current valuation of the company is around Rs 1,000 crore. It has Rs 30 crore debt and equity of Rs 320 crore. “We can raise another Rs 200-250 crore through debt,” he added.